Return fraud has quietly become one of retail’s most expensive leaks. As online shopping scales, so does abuse, often hidden inside legitimate-looking returns. Pinch AI is stepping into that gap with a sharp focus on what happens after the checkout button is clicked.
In a recent development, the company has now raised $5 million in seed funding, co-led by Dynamo Ventures and Infinity Ventures, to scale its approach as return volumes surge, particularly around peak shopping seasons.
Built by people who have seen fraud at internet scale
Pinch AI was founded by veterans who spent years building and scaling risk systems at some of the world’s largest digital platforms. Co-founder and CEO Arthi Rajan Makhija, alongside co-founders Chirag Vaya and Jayan Tharayil, previously worked on fraud and abuse mitigation at PayPal and Google. Their systems protected billions of dollars in transactions and were adopted by tens of thousands of merchants.
What they noticed was a growing disconnect. Retailers were facing modern, organised return abuse but relying on blunt, outdated tools that often penalised their best customers. This insight became the foundation for Pinch, a platform designed to spot abusive behaviour without breaking trust with loyal shoppers.
Fixing returns without breaking customer relationships
Instead of treating all returns as equal risk, Pinch focuses on post-purchase behaviour. The platform helps retailers identify patterns that signal abuse while keeping friction low for genuine customers. That distinction matters. Heavy-handed policies may curb fraud, but they also drive away high-value shoppers.
Early results suggest Pinch’s approach is working. Retailers using the platform have seen return rates drop by around 8%, while VIP customer retention increased by 20%. Roughly 80% of return reviews are now handled automatically, freeing teams from manual checks.
For leading apparel brands, the financial impact has been swift. Several reported a 10% lift in contribution margin within months of deployment.
From margin protection to ecosystem partnerships
One example is Mejuri, which uses Pinch to curb abusive return behaviour while continuing to protect high-value customers. The result: improved margins without sacrificing the shopping experience.
Pinch’s ambition goes beyond individual retailers. The company is actively seeking partnerships across the e-commerce stack, from returns management providers and platform developers to logistics partners and consultants. The goal is to embed smarter return controls directly into existing workflows.
At its core, Pinch AI is betting that retailers don’t need harsher rules. They need better judgment at scale. By tightening margins while preserving trust, the company is positioning itself as a quiet but critical layer in modern commerce infrastructure.
